Do you know if your marketing efforts are paying off? More importantly, do you know which marketing campaigns and channels are profitable and which are losing money?

Marketing is one of the toughest areas to calculate return on investment, and one of the reasons is because customers may have had contact with your company in multiple ways before they make a purchase. Other reasons such as a lack of systems are more easily solved and can give you valuable information that you can make smart decisions with.

One main goal of marketing is to acquire leads that will hopefully turn into buying customers and even repeat customers. To start measuring your marketing efforts, we need to find out where those leads are coming from and measure which ones became your customers. That means we need to develop a system that tracks a customer from lead source to sale.

The hard part is that some of this needs to be done outside the accounting system. The good news is that there are many tools and analytics available to help in this process.

One of the first things to do if you don’t already have it set up is to record the lead when they enter your sales process. Enter basic information about them in your CRM (customer relationship management system), and be sure to ask them how they found out about you. This will help you track the lead back to the campaign or channel that they came in on. Once they’ve made a purchase, you can connect the lead to the customer record and track revenue by marketing source.

If your leads come in digitally, there are many automated tags you can set up to track where they originated, whether it was from the web site, a particular web page, a social media account or a link from an email you sent out.

An important statistic for businesses is cost per lead, how much it costs to generate one lead for your business. The cost will vary by channel or marketing source. For example, someone coming from your website will cost less than someone coming from social media in most cases.

Once you know how many leads to generate to make a sale, you can start calculating what your marketing budget should look like. More importantly, you’ll be able to forecast your revenue more accurately, too.

While numbers are probably the last thing you think about when you’re doing your marketing, they can be very effective for your bottom line. There are many metrics beyond cost per lead that would be valuable to measure as well. Here are just a few of them:

Number of leads (in total or per channel)

Number of press mentions

Number of direct mail pieces sent out

Number of email subscribers

Number of social media connections per platform

Number of posts sent, number of shares, number of comments

Total web visitors, new and returning

Google rankings for keywords

Number of customer reviews per site, ratio of positive to negative reviews

You might not think of accountants when you are doing your marketing, but we encourage you to think about the “numbers” part of marketing, the financial side. And as always, if you want help developing these processes and metrics, please reach out.

With holidays approaching, this is the perfect time of year to take a moment and reflect on all of the things we are grateful for. Being grateful may sound a bit trite, but it’s also the number one, hands down, fastest way to bring more positivity and less negativity into your work and life.

Acts of gratitude are selfless and done unconditionally. You can use gratitude as a private exercise of reflection or you can express your gratefulness to show people that they are appreciated.

You don’t have to wait to feel gratitude; you can invoke it proactively.

If you don’t have a gratitude practice, consider starting one. Science has gotten involved in studying gratitude, especially in the field of positive psychology, and the benefits to health and well-being are enormous. It can benefit your business, too, when you show appreciation for business partners, employees, customers, and vendors.

Here are five easy ways to bring more gratitude into your work and life:

Think of five clients you can send thank you notes to. You can write them by hand or send a greeting card with a thank you message.

On your customer service email templates, add a line before the closing that says, “We appreciate your business.” It does make a difference.

Quick, right now, think of five things you are grateful for and list them off the top of your head. After you’re done, you should feel a little bit happier than you did a few minutes ago. Use this tool after you feel a negative emotion to move you back into positivity faster.

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Find part of your day that you don’t love, such as your commute to work. Change it to your gratitude commute, finding things along the way to be grateful for. You might be surprised how great you feel when you arrive at work.

Let one of your employees know that you’re grateful for the work they do for you. You can do this verbally, with a note, or with a gift.

When you practice gratitude, you can’t help but feel happy for the things you have in your life. Try these five things on a regular basis to bring more gratitude and positivity into your work and life.

Blockchain is a term that has been bantered about quite a bit when referring to the future of accounting technology. While its impacts are primarily long term in nature, let’s take a brief look to see what everyone is talking about.

Blockchain is a technology that can store transactions. Some people have referred to it as a digital ledger. Unlike your current accounting books, transactions recorded using blockchain technology are public. This digital spreadsheet of transactions or records is copied across thousands of servers so that there is no single point of failure. It’s a decentralized, distributed, and public digital ledger.

The blockchain ledgers are updated constantly as new records are added. They are also reconciled constantly. Once added, the records cannot be altered retroactively. This feature has many implications for auditing in that many records won’t need to be validated the old-fashioned way because blockchain is self-auditing. Auditors will still need to validate the non-digital components of a transaction such as physical inventory counts.

Prior to 2016, blockchain was originally referred to as block chain, where the blocks are the list of records or transactions. While the records are public, they are protected through cryptography. Each block includes cryptographic code from the previous block that keeps the entire chain of data safe and verified.

Blockchain is then a way for two parties to safely record their transaction permanently and with verification. While bitcoin is the most common current use of blockchain technology, many developers are working on new applications. Development started heavily in 2017, so it remains to be seen which applications will take off and which will die.

Blockchain’s uses in the future will be many:

Banking is the most obvious application, and right now the focus is on international transfers.

Stock trading.

Smart contracts. This concept is a huge part of what blockchain could be used for. Smart contracts are economic actions using blockchain that can be recorded without human interaction. They could initiate bill payments after goods have been received and after checking that there are funds available.

Elections.

Legal transactions, such as land titles.

Medical records, so that there is no more filling out of forms in each doctor’s office.

Blockchain in the future may eliminate the double-entry bookkeeping system that we have now. Instead of each person keeping their own set of records, companies will write their transactions into a public blockchain ledger. This will reduce the cost of bookkeeping in the long term. But for this to happen, much development must be done to standardize and optimize the financial system. Many accounting professionals are working today toward that goal, which is many years away.

For now, the biggest implication to realize for a blockchain future is that personal reputation will become incredibly important. Blockchain systems eliminate the intermediary so that you are doing business with other people in a peer-to-peer environment. Identity protection as well as reputation will become essential. Blockchain is also likely to take off first in countries where there is a lot of corruption and/or corporations are not trusted.

Blockchain may not impact your life today, but it’s definitely something to watch on the horizon.

How well do you love the way you spend your typical workday? What would a typical workday look like if you had absolutely no constraints? Here’s a fun exercise to get you thinking about your future and how you can make small changes in your current day to move it toward your ideal day.

Get comfortable and begin jotting out what your ideal day looks like. Start with what you do before you get to work. How do you start your day? With a workout or breakfast or something else? What does breakfast consist of? Where are you eating? What do your surroundings look like?

How do you get to work? What is your commute like? List the sights, sounds, smells. Once you get to work, what do you do first? Will you spend time on the phone? With whom? At the computer? Do you go somewhere?

Do you get a nice break for lunch? Write it all down in detail, and continue until your post-workday routine. Who are you with? Where are you? What do you do?

Here’s a partial sample:

“Lunch with my two friends at our favorite Mexican restaurant on the beach. We laugh a lot, share stories, and part with hugs and handshakes. After lunch, I work on my favorite work project, which challenges me to think about how to help my employees gain new skills. While I work, I listen to my favorite music CD. In a few hours, I am ready for a stretch break and walk outside to water the plants. After break, I return calls, talking with my clients and catching up on how to best serve them. …”

OK, now it’s your turn. Here are some questions to consider while you do this exercise:

What’s important to you to spend time on?

What’s enjoyable that you would really like to have as part of your daily routine?

What activities will give you a nice balance of accomplishment, relaxation, and socialization, even during work?

What do you need to include in your ideal day to get your needs met?

Change One Thing

Getting to your ideal day can take time. Don’t try to change your whole routine all at once. What one or two things can you pull out of your ideal work day description that you could bring into your current work day to brighten it with happiness? In the description above, this person might block out time to find employee training, go out for lunch instead of eating at her desk, make a new playlist, delegate tasks that are not part of her ideal day, or take more time when returning client calls.

Make gradual changes in your current day to improve it. With each change, you’ll be moving toward the realization of your ideal day. And if your ideal day doesn’t include bookkeeping but your current day still does, we’re here for you.

While “fetching” might be what some trained dogs can do, accounting systems are getting into the act too. This relatively new feature is called “receipt fetching,” and it’s when an app can retrieve documents directly from the vendors that you do business with so you don’t have to spend so much time on paperwork retrieval.

Apps that can perform receipt fetching can integrate with your accounts and pull invoices into their system. For example, if your business has an account with a utility or telecom company, the receipt fetching app can pull the electricity, water, or telephone bills into your receipt fetching app account and consolidate them.

The benefits are simple. You save time, certainly. But the bigger benefit is you no longer have a monthly deadline to get your documents to your accountant — at least for all the documents that can be automated in this way. This reduces stress and eliminates minutiae from your day.

Accountants benefit too. No accountant likes to spend their time asking clients for documents over and over again. We know you have better things to do with your time, and we know you probably hate doing the paperwork. Receipt fetching is an easy way to get the job done.

To take advantage of receipt fetching, the first step is to select a receipt-fetching app. A few of the apps to select from include LedgerDocs, ReceiptBank, HubDoc, and Greenback. Some of these apps do receipt fetching only, and others have many more functions.

The second step is to detemine which vendor accounts are supported, and to connect with them. Generally speaking, the connection is based on your account credentials, so if those change, the connection will need to be updated. When many of your documents can be pulled into one place, you don’t have to spend time logging into each vendor portal to pull receipts.

If you’re curious about how to benefit from receipt fetching in your business, please feel free to reach out.

Internal control is a very special phrase in the accounting profession. Tactically, it’s the set of processes that help a company produce accurate data throughout the organization, follow reporting requirements and laws, and maintain consistency and accuracy in its operations. Strategically, it’s an entirely new way of thinking and doing business.

Internal control helps to reduce organizational risk. A blunt way of putting it is internal control is what you put in place to avoid mistakes, intentional or accidental, and to control accuracy and quality. It impacts every aspect of an organization.

As a small business, you’ll want to be familiar with the concept because it can help you reduce risks you might not realize you have. Here are some practical examples of good ideas that support internal control:

When data is private and secure, provide access only to employees who need to know the data and restrict access of others.

Have someone check that your bank balance matches the reconciled amount in your books, and that someone should be different from the person who does the reconciliation. This is an example of what’s called segregation of duties.

Lock up paper checks and use the missing check number report to make sure none of the stock could be used for nefarious purposes.

Have employees sign in and out equipment that they take home. This is part of asset management.

Write and enforce a hardware and software use policy that includes items like employees should make sure their anti-virus software is active at all times, they should not bring in disks or CDs, and they should not download games or other unauthorized programs. This protects from computer viruses and helps to avoid catastrophic network failures.

There are literally hundreds of internal control procedures that should be implemented in small businesses as they grow into larger businesses.

Internal control is typically a big part of an audit or an attest function in accounting; it determines how many additional procedures an auditor needs to do in order to provide assurances about the reliability of the financial reports. But it’s also just good plain common business sense to implement as many internal control processes as are cost-effective for your business to protect it at the level of risk you’re comfortable with.

If you’d like to discuss the idea of internal control further, please feel free to reach out any time.

A great entrepreneur will always be on the lookout for ways to improve their business. Efficiency is a goal everyone wants to achieve when it comes to business because it can translate into less work and more profits. Here are five ways you and/or your staff can become more efficient in your business.

1- Get software-savvy.

Do you use the same software apps day in and day out? If you do, ask yourself how well you really know them? Are you able to just get by or are you a whiz with deep knowledge? If you’re just getting by and spending a lot of time wandering around or undoing things, you may want to take a course in that software.

The deeper our knowledge is in the apps we use every day, the more proficient we can be. This is true of all of your staff as well.

2- Reward new suggestions.

Your staff will be the first to know where there are bottlenecks and hiccups in your processes. Encourage them to speak up when they find something that could be improved. Listen to their ideas and reward the good ones. Implementing ideas from your business’s “front line” will increase its overall efficiency.

3- Watch your time.

How do you spend the bulk of your day? Working on new strategic projects, fighting fires, or a little of both? An honest evaluation of how you spend your time can yield many ideas about what’s going right and what needs work in your business.

Allocate at least an hour a day to work “on” your business instead of in it. That time is the only way your can move your business to the next level. If you’re the CEO, the focus should be more external than internal, more proactive than reactive, and more strategic rather than operational.

4- Avoid “bright shiny object syndrome.”

Are you easily distracted by an email (that you didn’t realize waylaid you into an hour of unproductivity), a web link, or a conversation? It’s crazy-easy to get sidetracked right in the middle of a task these days. It’s also easy to purchase something that looks great without doing your homework.

One way to avoid unnecessary purchases is to get three bids from potential vendors on all major purchases for your business. Make it a procedure so that you’re not lured into fancy marketing and items you might not ever use once you see the fine print.

5- One person’s trash is another’s treasure.

When you start to look around your office, you might be surprised at all the things you haven’t used in a while. Laptops that have been replaced, office supplies that were accidentally double-ordered, those folders you were going to use two years ago for a marketing campaign, even extra desks and chairs that are now empty: all of these items could be recycled to not only free up space but also get you some cash.

Which idea do you like best? Try it next week to improve your business efficiency.

A quick glance is all you need to check your fuel gauge, speed limit, engine temperature, and RPM when you’re driving down the road. Your car’s dashboard is designed to focus you on what’s important and what you need to know to have a safe trip.

Your car’s dashboard items, if they applied to business, would be called key performance indicators or KPIs. Unlike a car’s, the KPIs of your business vary depending on your business goals and what’s important to you. Common ones might include your cash balance, how fast you get paid, how much revenue is coming in, and whether you’re making plan. There are literally hundreds of them to choose from, and many of them are not derivable from your financial statements, such as number of orders, client satisfaction levels, and employee turnover.

Would it be useful to have a dashboard of KPIs for your business so you can know what’s working and get alerted to what needs focus? Here are the steps to creating a dashboard for your business:

Decide on the KPIs you want to track. Selecting 6-10 to create and track is a good place to start.

Select a tool that will provide you with the KPIs in the format you desire. There are many great add-ons to your accounting software that will instantly crunch the financial KPIs for you and present them in insightful formats, including charts, graphs, dashboards, and reports.

Create any new processes to calculate the new KPIs and get them entered into the dashboard app.

Hold a review meeting to go over the KPIs and determine any action based on the review.

There are many great KPIs available right in your accounting system, which might be plenty to get started with. And there are some real gems outside your accounting system that will take a bit of work to calculate. In any case, we can help you through this process. Feel free to reach out to us any time to discuss the possibilities of having a dashboard in your business.

If you have employees, you have the distinct honor once per year of being part of a worker’s compensation audit. You likely receive a form in the mail, an email request, or a phone call that will ask you about your payroll numbers and employees for the prior year.

Worker’s compensation is an insurance program that covers employees in the case they get hurt on the job. Each employee receives a classification code that describes the type of work they do, and a rate is figured based on the classification and its risk factors.

If you’ve hired anyone throughout the year, you might need to get a new classification by contacting your provider. If you have employees working in different locations (especially different states), that matters too.

The audit form will typically ask for gross payroll numbers by employee or by category or location of employee. That’s easy enough, but seldom does the policy run along your fiscal year, so the payroll figure needs to be prorated to match the policy period.

Your numbers need to tie back to the numbers reported on your quarterly payroll reports for both state and federal. The provider may also want copies of your 941s and your state payroll reports.

Once you’ve submitted your numbers, the insurance provider will calculate whether they owe you or you owe them additional fees.

The worker’s compensation audit happens every year (even if you pay worker’s comp premiums each pay period, some companies still request an annual audit). It’s not difficult, but it is time-consuming. If this is something you’d like our help with, please feel free to reach out.

The products and services your business sells make it unique. The same thing is true of how these items are set up in your accounting software. Whether you’re using QuickBooks Online or something else, getting your products and services set up right can impact the quality of the information you can get out of your accounting system.

Here are the types of items you can set up in most systems.

Inventory item

Inventory items are used in retail and wholesale businesses. They are physical items that the system can keep count of for you. You can purchase or make the items, and the associated cost is usually tracked when a shipping receipt or bill is entered. They are sold when a sale is made and an invoice or sales receipt is entered.

Transactions using inventory items impact a lot of accounts on both the balance sheet (cash, accounts payable, accounts receivable, and inventory) as well as the income statement (cost of goods sold, sales, and returns). The inventory item can be tied to default sales and purchase accounts in most systems.

Non-inventory item

QuickBooks offers a type of item called a non-inventory item. There’s a big difference in that non-inventory items do not have quantities associated with them. They don’t increase or decrease the inventory account. But they are able to be tied to default sales and purchase accounts like inventory items above.

Examples of non-inventory items include items purchased for a specific jobs, such as a contractor purchasing appliances for a custom home, items you sell but do not buy, such as an ebook or other digital product, and items you purchase but do not sell, such as shopping bags.

Service item

A service item is a special type of non-inventory item. There are no quantities, which makes sense because services are not physical items. They also are only connected to a sales account and not a purchase account.

With service items, you could set up service packages or hourly rates.

Bundle

A bundled item is a group of items that were designed to be sold together. For example, if you sell a gift basket of coffee products, you would bundle the items used to create the basket.

Assembly Item

An assembly item is a special type of inventory item where the quantity is tracked, but it differs from an inventory item in that it can’t be sold separately because it is a component and not a whole item. Assembly items are available in larger accounting and inventory apps, such as QuickBooks Enterprise, and are used in conjunction with a Bill of Materials or other build feature.

An example is a set of shelves. The assembly components are the individual shelves and the frame pieces that you may want to keep counts of. An inventory item that contains the shelves, the frames, and other parts is “built” from the assembly items. The nuts and bolts could be non-inventory items or assembly items, depending on whether you wan to keep count of them or not.

Sales Tax

Sales tax is a very special type of item used on an invoice or sales receipt to calculate sales tax due on the order. In many accounting systems, it’s usually kept in a separate list from the other product and service items. Rates can be entered for each sales tax jurisdiction.

Other

Some systems have an “other” category to capture items such as freight, shipping, handling, and other add-ons to the sale.

Tracking Profitability

Setting up the right type of products and services is critical to matching costs and revenue for accurate insights into gross margin. This section of your accounting system is also the one that’s most different from industry to industry and company to company. Be sure you get professional help from experts who know both the software and your industry for best results.